HMDA Data Show Fewer Loans, More Creditworthy Borrowers

HMDA Data Show Fewer Loans, More Creditworthy Borrowers

The 7.1 million home mortgage loans made in 2011 represented a 10 percent decline from the previous year and was the lowest total since 1995, according to data reported under the Home Mortgage Disclosure Act (HMDA) and summarized in a paper by Federal Reserve Board researchers.

In 1995, 6.2 million loans were reported in the HMDA data.

More buyers show good credit
Perhaps not surprisingly, current home buyers appear more creditworthy on average than at any point in the past 12 years. The median credit score of mortgage borrowers has risen about 40 points since the end of 2006, the Fed researchers reported.

In another comparison with the peak years of the country’s housing boom, researchers noted a change in income reported by homebuyers. Notably, more mortgage borrowers now appear to be telling the truth about their incomes, as opposed to a few years ago. "Comparing home-purchase borrower incomes reported in the HDMA data with income reported by homebuyers in household surveys suggests that incomes on mortgage applications were likely significantly overstated during the peak of the housing boom," the Fed researchers wrote. "In more recent years, there is no evidence of overstated incomes."

Rate of denials holds steady
Meanwhile, the proportion of loans that were denied in 2011 was virtually unchanged from 2010 at 23 percent.

For 2011, 7,632 institutions reported on their home lending under HMDA. That total includes 4,497 banking institutions; 2,017 credit unions; and 1,118 mortgage companies, 812 of which were not affiliated with a banking institution. For 2011, the number of reporting institutions fell nearly 4 percent from 2010, continuing a downward trend since 2006, when HMDA coverage included just over 8,900 lenders.